Contents

 Introduction
 Present scenario
 Types
 Kyoto's flexible mechanism
 Emission market
 How buying carbon credit can reduce emission
 Criticism
 Role of India
 What future holds
Introduction
 A carbon credit is a generic term for any tradable
certificate or permit representing the right to emit
one tonne of carbon dioxide or the mass of another
green house gas .
Present scenario
Indonesia India Rest of the
China 3% 2% world
7% 3%
European Australia
Union 28%
11%
Japan
10%
united states
22%

Former Soviet
Union
14%
Fig : Carbon emission % in few business countries
 south africa malaysia indonesia
1% 1% 1%
chile Qatar others
2% 1% 7%
maxico
4%
Republic of China
Korea 49%
8% brazil
9%

india
15%
Annual green house gas emission
by sector
Land use & Waste disposal &
biomass burning treatment
13% 4% Industrial
Residential,com
processes
mercial,& other
22%
13%

Transportation
fuels
18%
Agricultural
byproducts
16%

Fossil fuel
retrival,processin
g, & distribution
14%
 Kyoto’s flexible mechanism

Clean International
Joint
development emission
implementation
mechanism trading
 How Buying Carbon Credits Can
Reduce Emission??

Factory either
Factory Invests in new
Permissible reduces
Emissions machinery to
limit 80000 emissions or
100000 tones reduce
tones purchase
per year. emission
carbon credits

/2013 IABM 9
Criticism
 Kyoto mechanism is the only internationally agreed
mechanism for regulating carbon credit activities
 The Kyoto trading period only applies for five years
between 2008 and 2012.
Role of India
 India is expected to rake in $100 million annually by trading
in carbon credits and Indian companies are expected to
corner at least 10 per cent of the global market in the initial
years.
 According to industry estimates, Indian companies are
expected to generate at least $8.5 billion at the going rate of
$10 per tonne of CER.
 India is the world’s sixth largest emitter of carbon dioxide
with its present share in global emissions estimated at 6
per cent
examples
 Jindal Vijaynagar Steel
 Powerguda in Andhra Pradesh
 Handia Forest in Madhya Pradesh
Benefits for India
 It will gain in terms of advanced technological
improvements and related foreign investments
 It will contribute to the underlying theme of green
house gas reduction by adopting alternative sources of
energy
 Indian companies can make profits by selling the CERs
to the developed countries to meet their emission
targets.
TRADING OF CERS:

 Two Commodity exchanges trading in Carbon Credits

 Multi Commodity Exchange (MCX), &
 National Commodity and Derivatives Exchange
(NCDEX)
Financial support in India
 The World Bank has entered into an agreement with
Infrastructure Development Finance Company (IDFC),
 IDBI has set up a dedicated Carbon Credit desk
 HDFC Bank has signed an agreement with Cantor
CO2E India Pvt. Ltd and MITCON Consultancy
Services Limited (MITCON)
Legal issue
 Is a carbon credit an interest in real property or
personal property
 Is a carbon credit a mineral right?
 Is a carbon credit tangible or intangible?
Financial issues
 How to account for expenditure on CDM projects
 Whether or not to account for self-generated CERs
held with registry
 If credit are to be accounted, at what point of time
these should be recognized in books of account & at
what value,&
 How to account for sale consideration and its
disclosure in accounts and notes
Carbon pricing key issue for
industry
 How will a carbon price impact on business?
 What are the risk for business?
 What don’t we know ?
 What can business do to prepare ?
 Why does the govt. want to reduce carbon emission ?
 How should emission reduction be achieved?
 What other countries doing to reduce emission?
 How does a carbon price reduce emission ?
 How does the govt. proposal work ?
 What is the chamber doing to support members ?
Economical issue
 Costs and valuation
 Ethics and fairness
 Coase
 Equity
 Taxes v/s caps
 Trading
 Incentives and allocation
criticism
 Form of colonialism
 Non-existent emission
reduction
 Artificial production of green
house gases
 Carbon trade watch
Ethical issues
 Justice of the Cap
 Allocating Global Commons Resources as Property
Rights.
 Environmental Effectiveness
 Distributive Justice
 Procedural Justice
Impact on Business
 Financial service companies benefited from the
emergence of new market to expand.
 Companies focused on System and software
companies to monitor carbon emission for
corporations.
Pros & cons of carbon trading
 Cap & Trade
 Baseline & Credit
 General Costs v/s Benefits
 Carbon Trading v/s carbon Taxation
What future holds..